“Over my dead body. I do not like mediation. . . . Don’t you ever do that again.”
–Texas Bankruptcy Judge lecturing attorneys, back on 9/3/2014, about a request to approve mediation.
Studies show that local cultures influence the development of mediation programs.
So, I’m going out on a limb and guessing that little-to-no mediation occurred, back in 2014, in the Texas Bankruptcy Court where the above-quoted Judge presided.
On the positive side, however, it’s easy to see how mediation programs build off of experiences shared by the judges and practitioners involved. Here are four examples.
Example No. One: U.S. Second Circuit Court of Appeals – Exporting to Other Circuits
Back in the mid-1970s the U.S. Second Circuit Court of Appeals experiments with mediation programs as a way to deal with burgeoning caseloads. Resulting from such experiments is a mandatory mediation program, in the Second Circuit, that proves to be highly successful.
Over time, other Circuit Courts watch the success of the Second Circuit’s mediation program and start adopting similar programs of their own.
The result is that, today, nearly all of the thirteen U.S. Circuit Courts of Appeals have mediation programs similar to the one created by the Second Circuit Court of Appeals nearly four decades ago. And all appear to be successful.
Example No. Two: New Jersey Bankruptcy Court – Moving to Presumptive Mediation.
The New Jersey Bankruptcy Court has a mediation history dating back many years.
In 2014, the New Jersey Bankruptcy Court decides to move toward mandatory mediation and develops a program using the code phrase “presumptive mediation” (see “D.N.J. LBR 9019-2. Mediation: Procedures“). This phrase means it is presumed that disputes will be mediated, unless a specified exception exists.
Reports on presumptive mediation out of New Jersey are that bankruptcy practitioners initially opposed the idea but then became acclimated and then embraced presumptive mediation
Notably, New Jersey Bankruptcy’s presumptive mediation has a foundation in the New Jersey state courts. Presumptive mediation dates back, in New Jersey’s state courts, to pilot programs established by the New Jersey Supreme Court in 1995 and 2002. The pilot programs are then implemented, successfully, in state courts statewide. Accordingly, the New Jersey Bankruptcy Court, and the practitioners before it, are able to draw on state court experiences in developing bankruptcy’s own presumptive mediation program.
Example No. Three: Nebraska Bankruptcy Court – Starting Out.
On April 11, 2011, the Nebraska Bankruptcy Court adopts local mediation rules. In subsequent months, inertia from decades of no bankruptcy mediation is surprisingly difficult to overcome. However, inertia finally gives way to a combination of early positive forces. For example:
- The local Bankruptcy Judge supports mediation by, (i) encouraging parties to mediate their disputes, (ii) occasionally mandating mediation, and (iii) adding a deadline for mediation discussions to the Preliminary Pretrial Order form.
- A local bankruptcy trustee establishes and administers a mediation procedure for handling 144 preference / fraudulent transfer adversaries filed in an alleged Ponzi scheme case.
- Two law professors make mediation presentations at bankruptcy seminars.
- Local practitioners are encouraged to develop a habit of evaluating their cases for potential use of mediation.
Fortunately, many practitioners in Nebraska’s Bankruptcy Court, back then, also have experience in Nebraska’s state courts, where mediation had extensive use for a couple prior decades. So, they have those prior mediation experiences to draw upon in the new Bankruptcy Court mediation context.
Unfortunately, mediation developments fall prey, back then (for a while and like other bankruptcy matters), to the interruption of the booming economy that ensued.
Example No. Four: Bankruptcy Courts generally – Developing From No Mediation to Common Use
The use of mediation in bankruptcy courts, generally, dates back at least a couple decades. However, bankruptcy is one (and perhaps the only) Federal dispute resolution arena where mediation has been slow to take hold system-wide.
Some bankruptcy districts have been utilizing mediation, including mandatory mediation, for many years. And latest statistics show that a large majority of all bankruptcy districts have a local rule of some sort on mediation.
The progress from no local mediation rules to adopted mediation rules, in bankruptcy courts, occurred over a long time. Bankruptcy courts in Delaware and S.D.N.Y., for example, have been a leading force for bankruptcy mediation: many attorneys across the entire U.S. have been involved in the mediation programs of such courts–and have transported those experiences back to their own local courts.
The progress of bankruptcy mediation is nearly-always upward: toward expanding the use of local mediation rules. The most notable exception is the Bankruptcy Court in Chicago, which revoked its local mediation rules back in 2015, and those rules have never returned.
But today’s reality is this: mediation is now utilized throughout the entire bankruptcy system, and such utilization is continuing to develop and grow.
Conclusion
Bankruptcy has been a lagging adopter of mediation. Nevertheless, mediation has taken hold across the bulk of our bankruptcy system. Bankruptcy mediation has developed and grown because of experiences shared by bankruptcy attorneys and judges out of related contexts.
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